THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
(((The blog is for information only. You assume all risk of its use; we don’t warrant the accuracy of our content. You must do your own due diligence.)))

Friday, May 10, 2013

Still a Bear, but…

A REASON TO BE A BULL – THE BEAR MARKET CHECKLIST (CNBC)David Darst, the Morgan Stanley chief investment
strategist, has six boxes on his bear market checklist, and none of them are
filled in yet."…he certainly sees danger that conditions could change,
particularly in the case of policy mistakes. But the current trajectory is
higher."

Bear Market Checklist:

1. Is the Federal Reserve tightening monetary policy?

2. Are stock price valuations stretched?

3. Is investor euphoria present?

4. Are bond spreads widening?

5. Is there a recession looming?

6. Are transportation stocks, small caps and bank stocks
retreating?

"Right now we are 0-for-6 in the bear market
checklist," Darst said.Story at…

The Shiller PE: “[It] is now 23.2, vs. the pre-bubble average of about
15. It’s been higher on only three occasions in the past 93 years: Just before
the 1929 crash, just before the 2000 crash, and just before the 2008 crash.”

“From surging bank stock prices to rising Manhattan coop
values, all present bull markets are zero-interest-rate bull markets,” Levy
wrote recently. These bull markets are occurring in an environment of high
private-sector debts and limited growth potential, and therefore are
“intrinsically speculative, limited in their potential, fragile and ultimately
capable of severe declines.”

… No one’s sure when the reckoning will take place, but
it’s likely to be ugly when it does.”Story at

Sentiment has been extreme recently and is
now elevated; but that’s only 2 of the 6, so no bear market yet.I still expect a correction (10-20%) relatively
soon. The S&P 500 is 11% over its
200-dMA so a correction can be expected at any time.

MARKET RECAP
Friday, the S&P 500 was up 0.4% to 1,634 (rounded

VIX fell 4% to 12.59.

Market internals remain positive, but their
momentum is slowing down.Internals may
signal a turn down, but not quite yet. I must admit that when I suggested on 19 Aprilthat the market would reverse to the upside
(see http://navigatethestockmarket.blogspot.com/2013/04/stock-market-crash-prediction-another.html
), I didn’t expect a 3-week move up.On
the other hand, the market has only covered 5% in that period so I don’t feel
that I have missed to big a move…at least so far.

NTSM

Friday, the overall NTSM analysis was again HOLD at the close.

Indicators are positioned as follows:

VOLUME is positive based on the market’s sustained rise and subsequent
up volume.SENTIMENT has pulled back to
neutral, but it remains elevated at 61%-bulls. VIX is neutral, but it is leaning to the sell
side.PRICE is almost a sell now, because
the up moves have been smaller than the down moves.

The NTSM system sold at 1575 on 16 April.(This is just another reminder that I should
follow the NTSM analysis and not act emotionally – I am under-performing my own
system by about 2%!)

I have no problems leaving 20% or 30% invested.If the market is cut in half (worst case) I’d
only lose 10%-15% of my investments.It
also hedges the bet if I am wrong since I will have some invested if the market
goes up. No system is perfect.

Followers

About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.